Wife, Son Of Le-Nature's Ex-CEO Also Get Prison

Both were convicted of money laundering for selling $2.8 million worth of gems, which were bought with money taken in an accounting scheme.

Apr 27th, 2012

Joe Mandak, Associated Press

PITTSBURGH (AP) — When Gregory Podlucky, the former head of defunct Pennsylvania soft drink maker, Le-Nature's Inc., was sentenced to 20 years in federal prison for a massive accounting fraud and money laundering scheme last October, he had to take off his tie and belt and hand them to his wife, Karla, as a security precaution before deputy marshals could lead him away handcuffed to begin his sentence.

On Thursday, Karla Podlucky, 50, and their son, G. Jesse Podlucky, 31, came prepared for that same fate — Karla clutching a pair of athletic shoes that she later put on and her son not wearing a belt — before marshals led them both away to begin prison terms they received in the money laundering scheme.

Despite pleas for leniency and arguments by their attorneys that Gregory Podlucky was a controlling, manipulative tyrant largely responsible for their crimes, Senior U.S. District Judge Alan Bloch sentenced Jesse Podlucky to nine years in prison and Karla to just over four — 51 months to be exact.

Both were convicted of several money laundering counts at a November jury trial for their role in selling $2.8 million worth of gems through Sotheby's in New York. The jewels were bought with money Gregory Podlucky, Le-Nature's former CEO, took in an accounting scheme that bankrupted the company. Some of the jewelry proceeds were used to pay Gregory Podlucky's legal bills; about $80,000 was used by Jesse Podlucky to buy a Mercedes Benz.

"People commit crimes because they want access to wealth," Assistant U.S. Attorney James Garrett said after the sentencings. "Money laundering cases are important because they're really about trying to get away with the proceeds of crime without being detected."

Gregory Podlucky had previously pleaded guilty to masterminding an accounting scheme in which he and underlings used two sets of books to inflate the company's financial statements and obtain $875 million in credit and equipment leases before creditors forced Le-Nature's into bankruptcy in 2006 and helped uncover the fraud. The scheme cost investors, vendors and, mostly, lenders $684 million when the company went belly-up, not to mention the jobs of 240 workers at the company in Latrobe, about 40 miles east of Pittsburgh.

Gregory Podlucky had also pleaded guilty to the related money laundering scheme, which involved a small fraction of the $30 million or so authorities believed he siphoned from the company to fund a lavish lifestyle including gold, silver and platinum jewelry and diamond-rich watches, an 8,000-piece model train collection and $10 million spent on a mansion that was never finished.

Karla and Jesse Podlucky belatedly acknowledged their responsibility on Thursday, but had their attorneys argue that Gregory Podlucky mentally abused and manipulated them into complicity. Neither made a statement before the judge sentenced them, letting their attorneys speak for them during the hearing and afterward.

"Obviously, I disagree with the sentence," Jesse Podlucky's attorney, Robert Stewart said afterward. "Gregory Podlucky was able to manipulate businessmen and bank officials, savvy people. I don't care who you are, if you're in your dad's business, you do what he says."

Stewart was referring to not just the banking officials who were duped, but to five top Le-Nature's executives who were also previously convicted in the accounting fraud.

Stewart plans to appeal the conviction, arguing the jury was tainted because Judge Bloch allegedly allowed too much testimony about Gregory Podlucky's accounting fraud during the money laundering trial of his wife andson.

Karla Podlucky's attorney, Melvin Vatz, wouldn't comment on an appeal but also objected to her sentence.

"But for Gregory Podlucky, none of this would have happened," Vatz said. "He sucked his family in with his conduct. The trail of destruction Gregory Podlucky has left; he didn't care what he did to his family."